Trump Already in Campaign Legal Trouble?

By Chris Good

This post has been corrected.

Donald Trump's plane showed up in Iowa this morning, creating a stir
among political reporters there to cover a multi-candidate forum in
Waukee tonight. Trump wasn't on it, but the trip by two aides could have
more 2012 fallout than anticipated.

After Trump's lawyer, Michael Cohen, told reporters
that a billionaire pharmaceutical magnate had paid for the trip, on
which he and another Trump aide had planned to learn about Iowa and
report back to Trumps, Politico's Ben Smith reports that Trump may have already violated campaign finance laws:

Specifically, Campaign Legal Center's Paul Ryan told
POLITICO, "testing the waters" efforts are subject to a ban on corporate
and union donations and a contribution limit of $2,500.

"Federal law is really clear here: if you are spending money determining
whether to run that falls under the category of 'testing the waters'
and you have to use federally permissible funds," Ryan said, a point he
argued in a recent white paper.

In other words: If Trump sends people to Iowa to "test the waters" for
his candidacy, he has to abide by campaign-finance restrictions--just as
if he were already running. That's if the trip cost more than $2,500,
or if the money came from the pharmaceutical company itself, not the
individual donor.

This development is sure to elicit schadenfreude in Washington, where
insiders love nothing more than to scoff at Beltway wannabes and their
plebian lack of campaign-finance knowledge. The cocky Trump, caught up
among the campaign illiterate! How delectable to Washingtonian tastes.

Some points about "testing the waters," campaign finance restrictions, and Trump's hiccup:

1) It's entirely possible that most major Republican presidential
contenders have already broken these same rules. The Campaign Legal
Center's white paper,
published last Friday, suggested that Haley Barbour and Mitt Romney, in
particular, could be furthering their 2012 ambitions with money raised
through political organizations not registered as federal PACs and not
subject to federal campaign-finance restrictions. CLC also concluded
that "testing the waters" rules have been skirted since the 1970s, as
soon as new finance restrictions were enforced.

2) Trump is technically bound by federal election restrictions even if he does not run.*

3) Trump cannot simply refund the money if he decides to run.**

4) How do we know if Trump broke the rules? Candidates are limited to
raising $2,500 per person for each presidential primary and general
election campaign. "In-kind" contributions of goods and services count
against that limit. Corporations and unions are barred from donating to
political campaigns. So, Trump broke the rules if either a) the trip
cost more than $2,500, or b) it was paid for by his donor's corporation,
not the donor himself.

There are, however, many gray areas in campaign finance law. For one
thing, donors often "max out" all at once, which in this year means
donating $5,000, half for the primary and half for the prospective
general election. If the trip cost between $2,500 and $5,000, Trump
could possibly massage the accounting to avoid a violation.

And after the Supreme Court's Citizens United ruling, the court
may well think corporations and unions should be able to donate to
political campaigns directly. That ruling dealt with independent
campaign spending, and donations to third-party groups that conduct
independent spending, but if we extend the base logic expressed in the
majority opinion, it seems legal direct donations from corporations and
unions would be validated if challenged.

5) The Federal Election Commission does not actively enforce anything.
The FEC does not have a vast network of field agents to hunt down
possible violations that fall into rarely considered legal gray areas.
There are no plainclothes election cops, planted surreptitionsly at
Iowa's diner counters, waiting to pounce if a candidate's coffee is
purchased through Firefighters Union's general fund. Enforcement is
further bogged down by the FEC's current makeup, split between three
Republican and three Democratic commissioners. Needing a majority to
take action, the FEC rarely rules in favor of new enforcements in newly
questioned areas of regulation, and campaign-finance watchdogs complain
that it never rules in favor of enforcement anyway.

When it comes to campaign-finance violations, it's up to other campaigns
and watchdog groups (like CLC, for instance) to file complaints with
the FEC, asking the commission to dig through a candidate's paperwork
and determine whether a violation happened.

In sum, while this development is amusing and probably indicates Trump
should hire a campaign finance lawyer to help out this Cohen fellow, it
probably isn't the biggest problem he has on his hands.

*The post originally stated that CLC's Paul Ryan had told me Trump would only be bound by federal restrictions during his "testing the waters" period if he actually decided to run. This was the product of a misinterpretation of Ryan during a conversation about candidates and "testing the waters." Ryan later e-mailed to say this was not correct. We regret the error.

**The post originally asserted that, according to the CLC white paper, Trump could simply refund illegal contributions during the "testing the waters" period if he decided to run. This was the case between 1980 and 1985, but as the white paper notes, the FEC changed the rules at that point. Again, we regret the error.